Ken Block: Assembly should reject pension deal

The recent pension settlement is an embarrassing chapter in Rhode Islandís history. Much has been written about the negative fiscal consequences of the deal. But letís also consider the process: The General...

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By
Ken Block
Posted Mar. 25, 2014 @ 12:01 am

The recent pension settlement is an embarrassing chapter in Rhode Islandís history. Much has been written about the negative fiscal consequences of the deal. But letís also consider the process: The General Assembly passes legislation to reform our pension system; then the unions and a small group of Democratic politicians work out an agreement behind closed doors to change the law; and now the General Assembly, which is responsible for writing our laws, is expected to rubber stamp a settlement that it did not negotiate on behalf of a population that cannot afford the settlement.

The legislative process in Rhode Island is already non-transparent and reckless enough without creating a new method of backroom dealing. The General Assembly must reject this settlement to prevent a dangerous precedent from being set.

Beyond the very serious problems with process, itís also important to understand the motivations of the people who negotiated this proposed settlement. The state had two Democratic officials leading the negotiations: a failed, one-term governor on his way out the door and a general treasurer who initiated the pension reform effort but who now finds herself in a contentious three-way Democratic primary where union votes will make the difference between winning and losing.

Gov, Lincoln Chafee, who relied on union endorsements and union support to win his election, never wanted a court battle and advocated a settlement with the unions from the beginning.

As for General Treasurer Gina Raimondo, her entire ramp-up to the 2014 governorís race is based on fixing the stateís pension system. Regardless of the fiscal damage that would result from the settlement, Treasurer Raimondo wants to see this issue resolved as quickly as possible so it does not complicate her run for governor.

Treasurer Raimondo needs this settlement to be adopted, not because it helps Rhode Island or serves the interests of the retirees for which she is responsible, but because her political career depends on it.

This is politics at its very worst: an elected official who is motivated by winning the next election instead of making decisions that best serve the interests of the people. With Treasurer Raimondo, there is a clear pattern emerging. In addition to this secret pension settlement, according to The Wall Street Journal, she played politics with the pension fund by firing a top fund manager because of union pressure. She again played politics with the pension fund by divesting from successful American gun manufacturers, which even Michael Bloomberg in New York would not do, not to mention her sudden desire to give drivers licenses to people here illegally. Clearly, with Treasurer Raimondo, politics comes first.

The taxpayers of Rhode Island were being represented at the bargaining table by two compromised individuals behind closed doors, leaving the public no way to make sure that their interests were being effectively and forcefully represented. Instead of complete transparency, we have a situation where both sides are operating under a gag order, which is still in effect and prevents participants from talking about how the new agreement was reached.

House Minority Leader Brian Newberry has rightly pointed out the sheer lunacy of this situation. He has noted that by approving this pension settlement, the General Assembly could be creating a contract that could damage future state efforts to curb the cost of union contracts. He has pointed to language in the deal which may have been inserted to protect contract rights and block future changes to union contracts by the state.

This fiscally irresponsible pension settlement is the product of a deeply flawed process. And when the terms were negotiated, the people of Rhode Island were represented by compromised politicians. For these reasons, we must reject the pension settlement and let the courts decide its constitutionality. The time for tinkering with pension reform has long passed.